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In only three decades, China has become the second largest economy in the world. Averaging 10% growth each year, China’s economy has become more market-oriented with a rapidly growing private sector.

To sustain that growth, China needs to move from its capital-intensive infrastructure investment to a service-based consumption model.

At the same time, China also faces mass urbanization.

The world’s urban population is exploding, growing from 3.5 billion today to perhaps 6.3 billion by 2050.

By 2030, China could have 221 cities with 1 billion people. Today, Europe has about 35 cities with 1 million people.

As urbanization expands, cities will become centers of economic, social and technological change. Governments need technology to innovate services, cut spending and increase jobs.

That gives China an enormous opportunity to harness cloud computing, mobility, social media and big data technologies to innovate new business and spark entrepreneurship nationwide.

The Power of Cloud, Mobile, Social Media and Big DataCloud computing is more transformational than the Internet.

According to the 2012 Sand Hill Group Study, cloud computing will create more jobs than the early Internet did, because the cloud is also driving mobility, social media and big data trends. The intersection of these technologies will fundamentally reinvent the entire IT landscape for the next 20-25 years.

The cloud is not a place. Rather, it is an innovative way of bundling computing infrastructure (Infrastructure as a Service), development tools (Platform as a Service) or applications (Software as a Service) to be rented on demand from a data center. The public cloud deploys these services to users over the Internet. A private or community cloud deploys services to users in a protected network. And a hybrid cloud connects public and private clouds to extend IT capacity.

New Business Creation, IT Efficiencies and JobsCloud computing drives both business agility and IT cost efficiencies. The cloud frees working capital for businesses to reinvest in growth that creates jobs. The Sand Hill Group estimates that the cloud will save U.S. businesses $625 billion in 5 years.

IDC found that by late 2015, cloud services spend would create 6.75 million jobs in China and India. Media and communications, banking and manufacturing would gain the most jobs.

McKinsey Global Institute forecasted that big data could help U.S. retailers increase operating margins by 60%, reduce product development and assembly costs by up to 50% and increase productivity and profit for any company by 5%. That suggests China can use cloud and big data to improve its cost efficiencies in retail and manufacturing to expand consumerism.

Cloud Benefits All BusinessesCloud computing can drive business growth from start-up to multi-national in every industry vertical.

Silicon Valley venture capitalists love the cloud for its greater capital efficiency. Start-ups no longer spend 10-15% of their venture capital building IT infrastructure. Instead, they can launch a business with almost no up-front capital.Small-to-medium businesses launch new operations quickly in the cloud. This reduces risk and lets them scale quickly to meet demand. Large enterprises use the cloud to define new business models. For example, business intelligence in the cloud helps retailers collaborate with suppliers to dynamically match supply and demand. And financial services and telecommunication providers can analyze consumer preference data to tailor offerings and advertising.

Silicon Valley has found that, while start-ups can launch easily today, it is harder for them to scale to create long-term value. Scale is often achieved through creative business models that marry enterprise capital and knowledge with start-up innovation. For example, the New York Stock Exchange Corporate Connections program specifically matches start-ups with enterprises to accelerate partnerships and acquisitions.

For China, the cloud supports growth in consumption, because more efficient businesses will produce more goods and services, with new ways to consume them.

Building An Entrepreneurial EcosystemThe cloud is just one enabler for China’s entrepreneurship strategy. Silicon Valley has several factors which make it the premiere entrepreneurial ecosystem in the world.

According to Stanford University Professor Willam F. Miller, Silicon Valley CEO and co-founder of the Mayfield Fund, an entrepreneurial ecosystem must combine business, social and political attributes. As Miller says, “good seeds must be planted in good soil.”

In the U.S. a “Cloud First” policy was adopted by the Federal government to drive adoption of cloud computing to impact $20 billion of the $80 billion IT budget.

Private and Community Clouds are being built for U.S. agencies with high security requirements. The public cloud is transforming online education and disclosing data for greater government transparency to all citizens.

Recovery.gov is the first U.S. Federal government solution to move to the public cloud. It is a public web site where citizens can see how their tax dollars were spent to create jobs via the 2009 economic stimulus.

Recovery.gov is a benchmark cloud success for government transparency because it took only 22 days to implement from feasibility study to production.

In U.S. cities, the Group of 7 (G7) was formed between CIOs from San Francisco, Chicago, Seattle, New York, Boston, Los Angeles and Philadelphia to collaborate informally on ways to build and share low-cost IT solutions that solve common problems.

The G7 recently launched the Cities.data.gov open data portal to combine open data sets with the U.S. Federal Data.gov portal. The G7’s goal is to create a repository of multi-level public data sets to spark creative solutions from software developers.

Cities are sponsoring civic hackathons for developers to build applications and prototypes using the public data. This drives tech-based improvements for a community’s quality of life. Applications might include tracking neighborhood crime statistics or enabling city workers to file inspection reports from the field.

The mobile-cloud is the new engine for participatory government. Cities like Boston have developed mobile applications for citizens to report issues, problems and crime. Using SAP and other technology, Boston and other cities have engaged “citizens as capacity” in their budget-stricken environments. They are also integrating with social media applications to reach citizens “where they are.”

The Community Cloud model allows larger jurisdictions to sell cloud services to smaller jurisdictions. The large entities can create a self-funding IT operation to deliver better applications to themselves and smaller entities at a lower cost for all.

Consolidating procurement between agencies or entities in a shared services model can create huge IT savings. In the U.S., the Commonwealth of Virginia used the Ariba SaaS solution to consolidate procurement for 171 state entities to save $30 million each year.

The shared services procurement strategy is also being used by the United Kingdom, Singapore and will be adopted by the European Union.

Next Cloud Steps For China China has an exciting opportunity to take its cloud investment to the next level. Its cloud pilot cities could explore any new approaches above to further their progress on eGovernment, finance and logistics, manufacturing, small business, ecommerce and the Internet of Things.

And here are a few more cloud and big data avenues that address urbanization and sustainability:

Analysis of traffic congestion data can eliminate causes of accidents and gridlock, as shown by Singapore and the city of Edmonton in Alberta, Canada.

The Internet of Things can enable smart transportation ecosystems to resolve global gridlock. And since growth in the automotive sector creates even more jobs in its supply chains, smart transportation could employ new people migrating to cities.

Analysis of cloud-based data for smart grid management can determine how to distribute energy resources with on demand pricing based on usage patterns.

Cloud adoption in all data centers can reduce energy and carbon consumption.

ConclusionAs Chairman of General Electric Jack Welch once said, “The winners in these global games will be those who can put together the world’s best in design, manufacturing, research, execution and marketing on the largest scale.”

Cloud computing is a global IT phenomenon with global business benefits.

The cloud can help China scale its economy, for any size business, in any industry. Most importantly, the cloud can energize China’s greatest asset: its young people.

When in Dalian and Beijing, I met many entrepreneurs and young professionals who were eager to learn and invent. Given unlimited opportunity, technology and support, who knows what China’s “best and brightest” can achieve?

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